First guilty plea made in Stanford Financial case

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On the day his one-time boss was hospitalized, former Stanford Financial Group executive James Davis pleaded guilty today to three fraud and conspiracy counts for his role in an alleged $7 billion fraud.

R. Allen Stanford, set to appear in court on a different matter, did not make the trip to the Houston federal courthouse from a Conroe jail cell. U.S. District Judge David Hittner said Stanford was found to have an irregular heartbeat and extremely high blood pressure around 5:30 a.m. and was taken to a Conroe hospital for evaluation.

The guilty pleas have been expected since Davis’ attorney said his client has been cooperating with investigators since March. The sentencing of Stanford’s former chief financial officer will come at another date, but legal experts have speculated he may face many years behind bars given the number of charges.

Hittner accepted the plea, which also calls for Davis to forfeit about $1 billion, and set a Nov. 20 sentencing date. Victims of the Stanford Financial Group’s collapse last year will get a chance to address Davis at that hearing.

After today’s hearing, Davis was contrite in a brief statement to reporters.

“I apologize and take responsibility for my actions,” he said. His attorney said Davis is currently earning about $10 an hour by laboring on a family farm in Michigan.

R. Allen Stanford has been in custody since mid-June when he was arrested and charged with 21 counts of conspiracy, fraud, bribery and obstruction of justice. He, Davis and others are accused of bilking investors in a $7 billion fraud involving certificates of deposit issued by an Antiguan bank that was part of Stanford Financial Group.

Stanford, who has been denied bail pending trial because of concerns he is a flight risk, was supposed to be in court today as part of a dispute over who will represent him. That hearing was cancelled because of his health issues. Hittner has kept Houston criminal defense lawyer Dick DeGuerin on Stanford’s case though DeGuerin asked to withdraw, and Stanford has asked to be represented by Christina Sarchio and Robert Luskin of the Washington firm of Patton Boggs. But Sarchio and Luskin won’t enter the case until they know they will be paid.

Because of a civil lawsuit filed by the Securities and Exchange Commission, the assets of Stanford’s companies and his own private assets have been frozen. An insurance policy has not yet paid anything to lawyers in the case.

Meanwhile in the civil case against Stanford, his investments in an Israeli development fund and a luxury Houston hotel can be sold immediately, over objections from the financier that he hasn’t been convicted of any wrongdoing, a federal judge ruled.


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